Define what is being examined
The word audit is used for different engagements. A financial-statement audit concerns a set of statements prepared under a reporting framework. Internal audit evaluates areas such as governance, risk and controls. A forensic engagement investigates a specific concern, while an FTA tax audit is an authority process.
Start by naming the subject matter, purpose and intended user. Without those details, two quotations labelled audit may cover very different work.
What a financial-statement audit does
The auditor obtains evidence to form an opinion on whether the statements are prepared, in all material respects, under the applicable framework. The work responds to assessed risks and includes relevant procedures and professional judgement.
The result is reasonable assurance, not absolute assurance. A financial-statement audit does not guarantee future viability, perfect records, or detection of every fraud and error. Management remains responsible for the statements and the underlying records.
A practical audit workflow
- Agree the engagement, entity, period and reporting framework.
- Understand the business and identify relevant risks.
- Request records and assess their completeness.
- Perform the planned procedures and evaluate findings.
- Resolve questions and consider the reporting implications.
- Issue the report appropriate to the evidence and circumstances.
The exact work varies. A fixed checklist or a promise to check a percentage of invoices is not a complete description of the audit approach.
Prepare the business before fieldwork
Complete the trial balance and reconcile banks, receivables, payables, inventory and other significant balances. Keep contracts, invoices, approvals and ownership information accessible. Explain unusual transactions and known record limitations early.
Assign a coordinator who can obtain explanations from the relevant teams. A shared request list with owners and dates is more effective than sending untracked files from several people.
Use the report carefully
Read the opinion, basis and other relevant sections, not just the signature page. Distinguish the audit report from a management letter or recommendations. A control observation does not automatically determine the opinion, and a clean opinion is not a statement that no control weaknesses exist.
For the right engagement, confirm legal and recipient requirements and the practitioner's eligibility and independence before appointment.
Sources and further reading
Official references checked during the 24 October 2026 refresh. Application details and requirements can change; use the current source for the relevant entity and period.
